On 20 December 2021, the OECD published detailed rules to assist in the implementation of a landmark reform to the international tax system, which will ensure Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.
The Pillar Two model rules provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy agreed in October 2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS.
The rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules under Pillar Two, which will introduce a global minimum corporate tax rate set at 15%. The minimum tax will apply to MNEs with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually.
The GloBE rules provide for a co-ordinated system of taxation intended to ensure large MNE groups pay this minimum level of tax on income arising in each of the jurisdictions in which they operate. The rules create a “top-up tax” to be applied on profits in any jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum 15% rate.
The new Pillar Two model rules will assist countries to bring the GloBE rules into domestic legislation in 2022. They provide for a co-ordinated system of interlocking rules that:

define the MNEs within the scope of the minimum tax;
set out a mechanism for calculating an MNE’s effective tax rate on a jurisdictional basis, and for determining the amount of top-up tax payable under the rules; and
impose the top-up tax on a member of the MNE group in accordance with an agreed rule order.

The Pillar Two model rules also address the treatment of acquisitions and disposals of group members and include specific rules to deal with particular holding structures and tax neutrality regimes. Finally, the rules address administrative aspects, including information filing requirements, and provide for transitional rules for MNEs that become subject to the global minimum tax.
“The model rules released today are a significant building-block in the development of a two-pillar solution, converting the foundations of a political agreement reached in October into enforceable rules,” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. “The fact that Inclusive Framework members have managed to reach a consensus on this detailed and comprehensive set of technical rules demonstrates their commitment to a co-ordinated solution to addressing the challenges raised by an increasingly digitalised and globalised economy.”
In early 2022, the OECD will release the Commentary relating to the model rules and address co-existence with the US Global Intangible Low-Taxed Income (GILTI) rules. This will be followed by the development of an implementation framework focused on administrative, compliance and co-ordination issues relating to Pillar Two. The Inclusive Framework is also developing the model provision for a Subject to Tax Rule, together with a multilateral instrument for its implementation, to be released in the early part of 2022. A public consultation event on the implementation framework will be held in February and on the Subject to Tax Rule in March.
To access the full text of the model rules, including an overview, FAQs as well as fact sheets on the application of the rules, visit https://oe.cd/pillar-two-model-rules.
Contacts:

Grace Perez-Navarro, Deputy-Director of the OECD Centre for Tax Policy and Administration (CTPA) | grace.perez-navarro@oecd.org | +33 1 45 24 18 80

Achim Pross, Head of CTPA’s International Co-operation and Tax Administration Division | achim.pross@oecd.org | +33 1 45 24 98 92

Lawrence Speer in the OECD Media Office | Lawrence.Speer@oecd.org | +33 1 4524 7970

OECD Media Office | news.contact@oecd.org |+33 1 4524 9700

Compliments of the OECD.
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The European Commission has today presented a key initiative to fight against the misuse of shell entities for improper tax purposes. December 22nd’s proposal should ensure that entities in the European Union that have no or minimal economic activity are unable to benefit from any tax advantages and do not place any financial burden on taxpayers. This will also protect the level playing field for the vast majority of European businesses, who are key to the EU’s recovery, and will ensure that ordinary taxpayers do not suffer additional financial burden due to those that try to avoid paying their fair share.
While shell, or letterbox, entities can serve useful commercial and business functions, some international groups and even individuals abuse them for aggressive tax planning or tax evasion purposes. Certain businesses direct financial flows to shell entities in jurisdictions that have no or very low taxes, or where taxes can easily be circumvented. Similarly, some individuals can use shells to shield assets and real estate from taxes, either in their country of residence or in the country where the property is located.
Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “Shell companies continue to offer criminals an easy opportunity to abuse tax obligations. We have seen too many scandals arising from misuses of shell companies over the years. They damage the economy and society as a whole, also placing an unfair extra burden on European taxpayers. Today, we are moving to the next level in our longstanding fight against abusive tax arrangements and in favour of more corporate transparency. New monitoring and reporting requirements for shell companies will make it harder for them to enjoy unfair tax advantages and easier for national authorities to track any abuse arising from shell companies. There is no place in Europe for those who exploit the rules for the purpose of tax evasion, avoidance or money laundering: everyone should pay their fair share of tax.”
Commissioner for Economy, Paolo Gentiloni, said: “This proposal will tighten the screws on shell companies, establishing transparency standards so that the misuse of such entities for tax purposes can more easily be detected. Our proposal establishes objective indicators to help national tax authorities detect firms that exist merely on paper: when that is the case, the company will be subject to new tax reporting obligations and will lose access to tax benefits. This is another important step in our fight against tax avoidance and evasion in the European Union.”
Background
Once adopted by Member States, the proposal should come into force as of 1 January 2024.
This is one initiative in the Commission’s toolbox of measures aimed at fighting abusive tax practices. In December 2021, the Commission tabled a very swift transposition of the international agreement on minimum taxation of multinational enterprises. In 2022 the Commission will put forward another transparency proposal, requiring certain large multinationals to publish their effective tax rates, and the 8th Directive on Administrative Cooperation, equipping tax administrations with the information needed to cover crypto assets. In addition, while this initiative addresses the situation inside the EU, the Commission will present in 2022 a new initiative to respond to the challenges linked to non-EU shell entities.
Compliments of the European Commission.
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The Commission has adopted the Multiannual Indicative Programmes (MIPs) of Global Europe setting out priority areas for cooperation with partner countries and regions around the world for 2021-27. This also includes the financial allocation for 2021-2024 (country level) and for 2021-2027 (regional level) that will support this cooperation for a total of almost €26.3 billion. The adoption of the country and regional MIPs will significantly contribute to climate actions, social inclusion and human development and migration and forced displacement and to achieve gender and biodiversity targets.
High Representative/Vice-President, Josep Borrell, said: “We need to match our words with actions. The investments under the Global Europe programme will ensure that the EU delivers on its political priorities and effectively addresses the needs of our partner countries and regions, ranging from sustainable peace, security and stability to global challenges, such as tackling COVID-19 and the fight against climate change. The EU remains the world’s largest donor of development and humanitarian aid and we will continue to stand up for a fairer and more prosperous future around the world.” 
Commissioner for International Partnerships, Jutta Urpilainen, said: “The European Union has a long history of cooperation based on shared objectives and values. With the programming of our cooperation for 2021-2027, we commit for another seven years to fight inequalities and support inclusive, green and sustainable development. Many of the agreed priorities will support the effective implementation of the Global Gateway strategy, levering key resources for sustainable and trusted connections that work for people and the planet, while tackling most pressing global challenges. I am particularly proud that programmes related to education should be allocated €6 billion over 2021-2027, an increase from 7 to 13% of total expenditures of our external action outside our neighbourhood. Children and youth should be given a real chance to reach their full potential and have a better future.”
A Team Europe that delivers
The priorities have been defined in consultation with the relevant partners’ authorities and a real Team Europe approach, together with EU Member States, the European financial institutions, EIB and EBRD, as well as the European Parliament. Consultations were also held with Civil Society Organisations, including women and youth organisations, local authorities, representatives from the private sector, the UN and other like-minded partners. The agreed priorities are in line with UN’s 2030 Agenda and the Sustainable Development Goals, the Paris Agreement and the EU’s Global Gateway Strategy.
Several projects in partner countries will be taken forward in the framework of Team Europe Initiatives that will receive substantial financial support, many of which will help deliver on the implementation of the Global Gateway. These initiatives will have to be jointly agreed, designed, implemented and monitored in a Team Europe approach.
Programming outcome – Facts and Figures
Programming documents for countries and regions adopted represent an amount of €26.336 billion:

Region
Country allocations 2021-24 (€ million)
Regional allocations 2021-27 (€ million)

Sub-Saharan Africa
9 076
10 242

Asia and the Pacific
2 320
2 344

Americas and the Caribbean
1 074
1 280

TOTAL
 12 470
 13 866

A mid-term review to be completed in 2024 will support the Commission’s decision on country allocations for 2025-27.
For Sub-Saharan Africa, Asia and the Pacific and the Americas and the Caribbean countries and regions, the MIPs will deliver on the overarching EU policy objectives:

Green deal features in all MIPs
Digital agenda features in over 80% of the MIPs
Sustainable growth and decent jobs features in around 70%
Migration is covered by more than half
Governance, peace and security features in nearly 90%
Social inclusion and human development covered in more than 90%; in particular education is addressed in 80% of MIPs
Gender is well mainstreamed in all MIPs

All the country and regional programming documents will be complemented by four thematic programmes already adopted: Human Rights and Democracy (€1.5 billion) Civil Society Organisations (€1.5 billion); Peace, Stability and Conflict prevention (€871 million) and Global Challenges (€3.6 billion). Finally, the ERASMUS+ MIP was adopted earlier this year, and will benefit from the financing coming from the non-neighbourhood geographic envelopes with an amount of €1.79 billion.
Background
The Global Europe programming, officially launched in November 2020, addresses the overarching Commission priorities, promotes the post-COVID-19 green, digital, inclusive and sustainable recovery and fully respects the commitments contained in the new instrument, particularly on climate action, social inclusion and human development, migration and forced displacement, and gender equality.
The country and regional Multiannual Indicative Programmes are adopted by the Commission after consultation with the partner country/regional organisations, EU Member States and all relevant stakeholders. These documents establish the main priority areas for cooperation, specific objectives, expected results as well as the indicative allocations for the EU cooperation with partner countries and regions covered by Global Europe, i.e. the Neighbourhood, Sub-Saharan Africa, Asia and the Pacific, and the Americas and the Caribbean. These Multiannual Indicative Programmes therefore constitute the long-term plans for the implementation of Global Europe in these countries and regions.
Compliments of the European Commission.
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The priorities of France’s presidency are reflected in its motto: ‘Recovery, strength and a sense of belonging’:

recovery, to enable Europe to support the ecological and digital transitions

strength, to defend and promote our values and interests
a sense of belonging, to build and develop a shared European vision through culture, our values and our common history

According to the speech given on 9 December 2021 by French President Emmanuel Macron to present the priorities of the French presidency, the activities of the presidency will focus on three main areas:

pursuing an agenda for European sovereignty, meaning Europe’s ability to exist in the world as it currently exists and defend its values and interests
building a new European growth model

creating a more ’human-sized’ Europe

If I had to sum up in one sentence the goal of this presidency from 1 January to 30 June 2022, I would say that we need to move from being a Europe of cooperation inside of our borders to a powerful Europe in the world, fully sovereign, free to make its choices and master of its destiny.
Emmanuel Macron, President of the French Republic. Presentation of the French presidency of the Council of the European Union at the Élysée Palace, 9 December 2021.

French presidency website
Priorities of the French presidency
Calendar of meetings and events under the French presidency

The tasks of the presidency
The presidency is responsible for driving forward the Council’s work on EU legislation, ensuring the continuity of the EU agenda, orderly legislative processes and cooperation among member states. To do this, the presidency must act as an honest and neutral broker.
The presidency has two main tasks:
Planning and chairing meetings in the Council and its preparatory bodies
The presidency chairs meetings of the different Council configurations (with the exception of the Foreign Affairs Council) and the Council’s preparatory bodies, which include permanent committees such as the Permanent Representatives Committee (Coreper), and working parties and committees dealing with very specific subjects.
The presidency ensures that discussions are conducted properly and that the Council’s rules of procedure and working methods are correctly applied.
It also organises various formal and informal meetings in Brussels and in the country of the rotating presidency.
Representing the Council in relations with the other EU institutions
The presidency represents the Council in relations with the other EU institutions, particularly with the Commission and the European Parliament. Its role is to try and reach agreement on legislative files through trilogues, informal negotiation meetings and Conciliation Committee meetings.
The presidency works in close coordination with:

the President of the European Council
the High Representative of the Union for Foreign Affairs and Security Policy

It supports their work and may sometimes be requested to perform certain duties for the high representative, such as representing the Foreign Affairs Council before the European Parliament or chairing the Foreign Affairs Council when it discusses common commercial policy issues.
Compliments of the Council of the EU.
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Today, the Commission adopted rules relating to the EU Digital COVID Certificate, establishing a binding acceptance period of 9 months (precisely 270 days) of vaccination certificates for the purposes of intra-EU travel. A clear and uniform acceptance period for vaccination certificates will guarantee that travel measures continue to be coordinated, as called for by the European Council following its latest meeting of 16 December 2021. The new rules will ensure restrictions are based on the best available scientific evidence as well as objective criteria. Continued coordination is essential for the functioning of the Single Market and it will provide clarity for EU citizens in the exercise of their right to free movement.
The EU Digital COVID Certificate is a success story of the EU. The Certificate continues to facilitate safe travel for citizens across the European Union during these times of the pandemic. So far, 807 million certificates were issued in the EU. The EU Digital COVID Certificate has set a global standard: by now 60 countries and territories across five continents have joined the system.
The new rules for intra-EU travel harmonise the different rules across Member States. This validity period takes into account the guidance of the European Centre for Disease Prevention and Control, according to which booster doses are recommended at the latest six months after the completion of the first vaccination cycle. The Certificate will remain valid for a grace period of an additional three months beyond those six months to ensure that national vaccination campaigns can adjust and citizens will have access to booster doses.
The new rules on the acceptance period of vaccination certificates apply for the purposes of travel. When introducing different rules to use the certificates at national level, Member States are encouraged to align them to these new rules to provide certainty for travellers and reduce disruptions.
In addition, today the Commission has also adapted the rules for the encoding of vaccination certificates. This is necessary to ensure that vaccination certificates showing completion of the primary series can always be distinguished from vaccination certificates issued following a booster dose.
Boosters will be recorded as follows:

3/3 for a booster dose following a primary 2-dose vaccination series.

2/1 for a booster dose following a single-dose vaccination or a one dose of a 2-dose vaccine administered to a recovered person.

Members of the College said:
Stella Kyriakides, Commissioner for Health and Food Safety, said: “A harmonised validity period for EU Digital COVID Certificate is a necessity for safe free movement and EU level coordination. The strength and success of this invaluable tool for citizens and business lies in its coherent use across the EU. What is needed now is to ensure that booster campaigns proceed as quickly as possible, that as many citizens are protected by an additional dose and that our certificates remain a key tool for travel and protection of public health.” 
Didier Reynders, Commissioner for Justice, said: “The EU Digital COVID Certificate is a success story. We should keep it that way and adjust to changing circumstances and new knowledge. Unilateral measures in the Member States would bring us back to the fragmentation and uncertainties we have seen last spring. The acceptance period of nine months for vaccination certificates will give citizens and businesses the certainty they need when planning their travels with confidence. It’s now up to the Member States to ensure boosters will be rolled out swiftly to protect our health and ensure safe travelling.”
Commissioner for Internal Market, Thierry Breton, said: “The EU Digital COVID certificate has become a global standard. By reflecting the latest scientific insights on boosters, the certificate remains an essential tool to combat the different waves of the pandemic. Together with the large-scale production and supply of vaccines, the certificate will help Member States accelerate the roll-out of boosters – a necessity to protect public health, while preserving the free movement of our citizens.”
Background
To facilitate safe free movement during the COVID-19 pandemic, the European Parliament and the Council adopted, on 14 June 2021, the Regulation on the EU Digital COVID Certificate. When this Regulation was adopted, reliable data about how long people would be protected after the primary series of a COVID-19 vaccine was not yet available. As a result, the data fields to be included in vaccination certificates do not include data concerning an acceptance period, unlike the data fields included in certificates of recovery. Up until now, it was, therefore, up to Member States to set rules on how long to accept vaccination certificates in the context of travel.
As COVID-19 vaccine booster doses are now being rolled out, recently more and more Member States have adopted rules as to how long vaccination certificates indicating the completion of the primary vaccination series should be accepted. These take into account that vaccine-induced protection from infection with COVID-19 appears to be waning over time. These rules either apply to domestic use-cases only or also to the use of vaccination certificates for the purpose of travel.
The Delegated Act is consistent with the approach adopted by the Commission in its proposal for a new Council Recommendation on a coordinated approach to facilitate safe free movement during the COVID-19 pandemic, from 25 November 2021. Vaccination certificates will be accepted by Member States for a period of nine months since the administration of the last dose of the primary vaccination. For a single-dose vaccine, this means 270 days from the first and only shot. For a two-dose vaccine it means 270 days from the second shot, or, in line with the vaccination strategy of the Member State of vaccination, the first and only shot after having recovered from the virus. Under these new EU rules for intra-EU travel, Member States must accept any vaccination certificate that has been issued less than nine months since the administration of the last dose of the primary vaccination. Member States are not able to provide for a shorter nor for a longer acceptance period.
Member States should immediately take all necessary steps to ensure access to vaccination for those population groups whose previously issued vaccination certificates approach the limit of the standard acceptance period. As of yet, no standard acceptance period will apply to certificates issued following the administration of booster doses, given that sufficient data regarding the period of protection is not yet available.
The acceptance period will not be encoded in the certificate itself. Instead, the mobile applications used to verify the EU Digital COVID Certificates will be adjusted: If the date of vaccination is longer than 270 days ago, the mobile application used for verification will indicate the certificate as expired.
To allow for sufficient time for technical implementation of the acceptance period and for Member States’ booster vaccination campaigns, these new rules should apply from 1 February 2022.
Compliments of the European Commission.
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The EU Commission has today proposed to establish the next generation of own resources for the EU budget by putting forward three new sources of revenue: the first based on revenues from emissions trading (ETS), the second drawing on the resources generated by the proposed EU carbon border adjustment mechanism, and the third based on the share of residual profits from multinationals that will be re-allocated to EU Member States under the recent OECD/G20 agreement on a re-allocation of taxing rights (“Pillar One”). At cruising speed, in the years 2026-2030, these new sources of revenue are expected to generate on average a total of up to €17 billion annually for the EU budget.
The new own resources proposed today will help to repay the funds raised by the EU to finance the grant component of NextGenerationEU. The new own resources should also finance the Social Climate Fund. The latter is an essential element of the proposed new Emissions Trading System covering buildings and road transport, and will contribute to ensuring that the transition to a decarbonised economy will leave no one behind.
Johannes Hahn, Commissioner in charge of Budget and Administration, said: “With today’s package, we lay the foundations for the repayment of NextGenerationEU and provide essential support to the Fit for 55 package by putting in place the financing of the Social Climate Fund. With the set of new own resources, we, therefore, ensure that the next generation will truly benefit from NextGenerationEU.”
Today’s proposal builds on the Commission’s commitment undertaken as part of the political agreement on the 2021-2027 long-term budget and the NextGenerationEU recovery instrument. Once adopted, this package will strengthen the reform of the revenue system started in 2020 with the inclusion of the non-recycled plastic waste-based own resources.
EU emissions trading
The Fit for 55 package of July 2021 aims to reduce net greenhouse gas emissions in the EU by at least 55% by 2030, compared to 1990, to stay on track to reach climate neutrality by 2050. This package includes a revision of the EU Emissions Trading System. In future, emissions trading will also apply to the maritime sector, auctioning of aviation allowances will increase, and a new system for buildings and road transport will be established.
Under the current EU Emissions Trading System, most revenues from the auctioning of emission allowances are transferred to national budgets. Today, the Commission proposes that in future, 25% of the revenue from EU emissions trading flows into the EU budget. At cruising speed, revenues for the EU budget are estimated at around €12 billion per year on average over 2026-2030 (€9 billion on average between 2023-2030).
In addition to the repayment of NextGenerationEU funds, these new revenues would finance the Social Climate Fund, put forward by the Commission in July 2021. This Fund will ensure a socially fair transition and support vulnerable households, transport users and micro-enterprises to finance investments in energy efficiency, new heating and cooling systems and cleaner mobility, as well as, when appropriate, temporary direct income support. The total financial envelope of the Fund in principle corresponds to an amount equivalent to around 25% of the expected revenue from the new emissions trading system for buildings and road transport.
Carbon border adjustment mechanism
The objective of the carbon border adjustment mechanism, which the Commission also proposed in July 2021, is to reduce the risk of carbon leakage by encouraging producers in non-EU countries to green their production processes. It will put a carbon price on imports, corresponding to what would have been paid, had the goods been produced in the EU. This mechanism will apply to a targeted selection of sectors and is fully consistent with WTO rules.
The Commission proposes to allocate to the EU budget 75% of the revenues generated by this carbon border adjustment mechanism. Revenues for the EU budget are estimated at around €1 billion per year on average over 2026-2030 (€0.5 billion on average between 2023-2030). CBAM is not expected to generate revenue in the transitional period from 2023 to 2025.
Reform of the international corporate taxation framework
On 8 October 2021, more than 130 countries that are members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting agreed on a reform of the international tax framework: a two-pillar solution to tackle tax avoidance and aims at ensuring that profits are taxed where economic activity and value creation occur. The signatory countries representing more than 90% of global GDP. Pillar One of this agreement will reallocate the right to tax a share of so-called residual profits from the world’s largest multinational enterprises to participating countries worldwide. The Commission proposes an own resource equivalent to 15% of the share of the residual profits of in-scope companies that are reallocated to EU Member States.
The Commission has committed to propose a Directive in 2022, once the details of the OECD/G20 Inclusive Framework agreement on Pillar One are finalised, implementing the Pillar One agreement in line with the requirements of the Single Market. This process is complementary to the Pillar Two Directive for which the Commission adopted a separate proposal today. Pending the finalisation of the agreement, revenues for the EU budget could amount to roughly between €2.5 and €4 billion per year.
Legislative process
In order to incorporate these new own resources in the EU budget, the EU needs to amend two key pieces of legislation:
First, the Commission proposes to amend the Own Resources Decision to add the three proposed new resources to the existing ones.
Secondly, the Commission also puts forward a targeted amendment of the regulation on the current long-term EU budget 2021-2027, also known as the Multiannual Financial Framework (MFF Regulation). This amendment offers the legal possibility to start repaying the borrowing for NextGenerationEU already during the current MFF. At the same time, it proposes to increase the relevant MFF expenditure ceilings for the years 2025-2027 to accommodate the additional expenditure for the Social Climate Fund.
The Own Resources Decision needs to be approved unanimously in Council after consulting the European Parliament. The decision can enter into force once it is approved by all EU countries in line with their constitutional requirements. The MFF Regulation needs to be adopted unanimously by the Council after obtaining the consent of the European Parliament.
Next Steps
The European Commission will now work hand in hand with the European Parliament and the Council towards swift implementation of the package within the timelines set in the interinstitutional agreement.
Furthermore, the Commission will present a proposal for a second basket of new own resources by the end of 2023. This second package will build on the ‘Business in Europe: Framework for Income Taxation (BEFIT)’ proposal foreseen for 2023.
Background
As an answer to the unprecedented pandemic challenge, the European Union agreed in 2020 on a record stimulus package of more than €2 trillion – boosting the long-term budget with more than €800 billion firepower of the temporary recovery instrument NextGenerationEU (in current prices).
With NextGenerationEU, the Commission has been enabled to issue bonds on a large scale backed by the EU budget. That means the Union can incur debt supporting all Member States to fight the crisis and build resilience. To help repay the borrowing, the EU institutions agreed to introduce new own resources as this would allow more diversified and resilient types of revenue, directly related to our common political priorities. New own resources will avoid that NextGenerationEU repayments lead to undue cuts to EU programmes or excessive increases in Member States contributions.
In 2021, the Commission has raised €71 billion (in current prices) via long-term bonds and currently has €20 billion of short-term EU-Bills outstanding under a sovereign-style diversified funding strategy.
[All prices are quoted in 2018 prices unless stated otherwise.]
Compliments of the European Commission.
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Looking back, I would define 2021 as a year of transitions. Geopolitical changes have intensified with power politics repeatedly challenging the EU and its values. We must respond with all the determination we can muster.
The pandemic has carried on longer than we imagined a year ago and the omicron variant is yet again requiring the introduction of major restrictions and threatening the recovery. Still, we know that vaccines are making a major difference. Thanks to the common purchase mechanism, a majority of Europeans have received at least two doses. The EU has also exported COVID-19 vaccines since December 2020 without interruption. Out of a total of 2 billion doses produced, the EU has exported over 1.1 billion doses to 61 countries and Team Europe has shared more than 385 million doses. The EU has therefore surpassed its target for 2021, which was to share 250 million doses by the end of the year, and the aim of Team Europe is to have donated a total of 700 million doses by mid-2022.
“We need to do more to reverse vaccination disparities and tackle growing imbalances and inequalities.”  
Still, unequal vaccination rates across continents underline the need to accelerate donations and develop local vaccine production capacities, especially in Africa. Indeed, while in Europe 60% of the population is fully vaccinated (EU: 68%), full vaccination rates stand at 61% in South America, 56% in North/Central America and the Caribbean, 57% in Oceania, 53% in Asia and only 8% in Africa. On top of these disparities, the pandemic has put a stop to the developing world catching up, leading to an increase in world hunger and poverty, with the number of people falling below poverty line due to COVID estimated at around 150 million by the World Bank. We need to do more to reverse this trend and tackle growing imbalances and inequalities.
In addition to handling the pandemic, we have tended to run from one crisis to the next, with Belarus, Ukraine, Mali, Sudan, Afghanistan, Ethiopia and Venezuela dominating the international and EU agenda. Being in permanent crisis management mode has sometimes weakened our capacity to address transversal, longer-term issues that should be at the centre of our foreign policy, such as revitalising multilateralism, or handling migration in a balanced way, or the energy and climate crises or the rules for the digital transition.
“Being in permanent crisis management mode has sometimes weakened our capacity to address transversal, longer-term issues.”
While in 2021 there were many setbacks and challenges, we also had some positive developments. For example, we were able to present the Strategic Compass to the EU member states. Its purpose is to strengthen the EU’s role as a security provider. Until now, Europeans have too often lived in a ‘security bubble’, despite a fast-worsening security environment. The EU does not aim to be a military power in traditional terms, but we do need to be better able to defend ourselves. The Compass should be adopted next March and allow us to take our own security and defence more seriously.
Another positive example is how EU climate diplomacy played a leading role in the fight against climate change at COP26 in Glasgow. Negotiating with 197 parties implies compromises and the EU played its part, for instance, with the Methane Pledge which it initiated and 100 countries eventually signed.
“The Strategic Compass should allow us to take our own security and defence more seriously.”
2021 also saw the relaunch of EU-US relations under President Biden. The new direction of the US administration enabled us to make progress, for example on climate change, on the Iran nuclear negotiations and on corporate taxation. While the way in which the departure from Afghanistan and AUKUS decision unfolded was unfortunate, at the end of the year we held close EU-US consultations on China and the Indo-Pacific and also agreed to launch a dedicated EU-US dialogue on security and defence.
This year we increased our engagement with Latin America, including inter alia the first high-level EU visit to Brazil in nine years and the inauguration of the EllaLink fibre optic submarine cable between the EU and Brazil. The EU-Latin American and Caribbean Leaders’ meeting of early December should also trigger new developments in the coming months.
On China we maintained EU unity, recognising that the EU sees the country as a partner, competitor and systemic rival, all at the same time. In 2021, the worsening of the human rights situation inside China, its regional behaviour, as well as the decision to sanction MEPs and other EU official bodies and most recently its coercion of Lithuania have all taken their toll.
Overall, we have put the emphasis on diversifying our partnerships across the Indo-Pacific. Our new Indo-Pacific strategy(link is external) promotes EU’s engagement in the region to not only boost trade and investment, but also to cooperate more on security issues, for example maritime or cyber security. My visit to Jakarta in June consolidated our engagement with ASEAN. We have also engaged more closely with Central Asia and started to improve our cooperation with the Gulf countries.
In Africa, the year was unfortunately marked by many conflicts and the overall deterioration of the situation in the Sahel. The civil war in Ethiopia in particular took on a dramatic dimension. We are now preparing the AU-EU summit to be held in February where, as the EU, we will have to deliver on our rhetoric, notably on vaccines and climate finance.
The situation in Libya seems to have stabilised, with elections having been postponed again, and tensions with Turkey in the Eastern Mediterranean have tended to ease this year. The recently held Regional Forum of the Union for the Mediterranean and the EU-Southern Neighbourhood Ministerial Meeting in Barcelona at the end of November were also reminders of the urgent need to close the growing gap between the two shores of the Mediterranean and seize new opportunities for example around the green transition.
“In 2021, we have worked to defend EU interests and values and strengthen a rules-based global order in this year of transitions.”
In our eastern neighbourhood, 2021 featured clear examples of power politics, as we saw in the cases of Ukraine, Belarus and Moldova. To face these threats, the EU has provided political as well as operational support to its partners in a firm and unified manner, for example with the 5th package of sanctions against the Lukaschenko regime in Belarus. As hybrid conflicts proliferate, we must continue to back Ukraine or Moldavia in resisting the pressure from Russia, and maintain an unyielding approach to Belarus. On that regard, The Eastern Partnership Summit reaffirmed EU’s strategic, ambitious and forward-looking approach with our Eastern European partners. The rise in divisive rhetoric and actions across the Western Balkans especially in Bosnia-Herzegovina have also hampered efforts to bring the six countries closer to their European future.
This brief overview of the past year is by no means exhaustive, but I wanted to recall some of the most salient issues. In 2021, we have worked to defend EU interests and values and strengthen a rules-based global order in this year of transitions. That work must continue in 2022 with all the determination we can muster.
Author:

Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission

Compliments of the European Commission.
The post 2021 in review: A year of transitions first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Today, the EU Commission issues policy guidance for a fair and inclusive transition towards climate neutrality to complement the package on delivering the Green Deal presented in July. The proposed Council Recommendation sets out specific guidance to help Member States devise and implement policy packages that ensure a fair transition towards climate neutrality, by addressing the relevant employment and social aspects linked to the transition in a comprehensive manner. The proposal pays particular attention to addressing the needs of the people and households that are highly dependent on fossil fuels and could be most affected by the green transition, and invites Member States to make optimal use of public and private funding and work in close cooperation with social partners.
Fairness and solidarity are defining principles of the European Green Deal. Policy actions to support people and their active participation are key for a successful green transition. With the right actions and policies in place, the green transition has the potential to create an additional 1 million jobs by 2030 in the EU and some 2 million jobs by 2050. At the same time, it is important to ensure that no one is left behind, and that the EU and its Member States continue to improve their capacities to anticipate change and to provide targeted support to the regions, industries, workers and households facing future challenges.
Putting people at the heart of the green transition
To fully realise the employment and social potential of the green transition, it is essential to use all available tools and put the right policies in place at EU, national, regional and local levels. Today’s proposal encourages Member States to take measures and actions, adapted to their particular circumstances, including:

Measures to support quality employment and facilitate job-to-job transitions. This includes for instance offering tailored job search assistance and promoting job creation, and facilitating access to finance and markets for micro, small and medium-sized businesses, in particular those contributing to climate and environmental objectives.

Measures to support equal access to quality education and training. This concerns for example developing up-to-date intelligence on skills needs in the labour market, providing high-quality and inclusive education and training on skills and competences relevant for the green transition, and increasing adult participation in lifelong learning.

Measures to support fair tax-benefit and social protection systems. The proposal invites Member States to assess and, where necessary, adapt these systems, for instance by further shifting the tax burden away from labour towards other sources contributing to climate and environmental objectives.

Measures to support affordable access to essential services. Member States are invited to continue to mobilise public and private financial support to invest into renewable energy, tackle mobility challenges and promote cost-saving opportunities linked to the circular economy.

Measures to coordinate policy action, follow a whole-of-economy approach, and actively involve social partners, civil society, regional and local authorities and other stakeholders. Measures to further strengthen the evidence base and advance the consistency of definitions and methodologies are also important to improve the targeting of social and labour market policies.

Optimal use of public and private funding. Member States have a wide range of EU and other funding at their disposal to implement the necessary measures for a fair transition to climate neutrality. The proposed Social Climate Fund of €72.2 billion in particular will support vulnerable households, transport users and micro-enterprises affected by the introduction of emissions trading for fuels used in road transport and buildings. It will be funded by the revenues of the emission trading. Other available EU funding under NextGenerationEU includes the Just Transition Mechanism (JTM) and the European Social Fund Plus (ESF+), the EU’s main instrument for investing in people with a budget of €99.3 billion in 2021-2027. A significant share of reforms and investments in Member States’ Recovery and Resilience Plans financed by the Recovery and Resilience Facility (RRF) will be directed to social policies, with specific support for the fair green transition by for example promoting the creation of green jobs and the development of green skills.

Members of the College said
Frans Timmermans, Executive Vice-President for the European Green Deal said: “With the Green Deal we will create a modern, sustainable economy with jobs that last for decades to come. Europe’s transition to climate neutrality will not be easy and we need to have policies across the economy that bring everyone along. Today we complement our proposals on the Social Climate Fund, the Just Transition Mechanism and others with additional policy guidance to make sure we leave no one behind on our path to a healthy, green, and fair future.”
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “To protect our planet and future generations, we must build a sustainable economy that works for everyone. The green transition has significant economic and job creation potential. It is essential that we make the most of the opportunities offered by the green transition, while making sure it is fair and inclusive so that no one is left behind. For this, we must invest in skills, quality jobs and affordable services.”
Nicolas Schmit, Commissioner for Jobs and Social Rights, said: “The Green Deal is an economic and climate imperative, and we all have to collectively ensure its success. But we do not underestimate the social and employment impact of the green transition. Social fairness must be at its heart, reflecting the values of the European social market economy. This policy guidance provides detailed, tangible ways for Member States, regions and local communities to protect the people who are at risk of poverty and social exclusion, as well as to enable people to make the most of the opportunities that the climate transition offers.”
Background
The European Green Deal, launched in 2019, sets out the EU strategy to become the first climate-neutral continent and transform the Union into a sustainable, fairer and more prosperous society that respects the planetary boundaries. The need for a fair transition is an integral part of the Green Deal which underlined that no person and no place should be left behind.
This is in line with the 2015 Paris Agreement, the European Council’s Strategic Agenda 2019-24 and the European Climate Law in force since July 2021. The European Pillar of Social Rights Action Plan complements and supports the green and digital transitions in line with a strong social Europe, notably through three EU headline targets in the areas of employment, skills, and social inclusion, endorsed by EU leaders in May and June 2021.
In July 2021, the Commission adopted the ‘Fit for 55′ package to deliver on the EU’s binding 2030 climate target of reducing net greenhouse gas emissions by at least 55% on the path to climate neutrality by 2050. This included the Social Climate Fund which aims to mobilise €72.2 billion to address the impacts of emissions trading in road transport and buildings on vulnerable households, micro-enterprises and transport users, to be funded by the revenues of the new emissions trading system. As part of the ‘Fit for 55′ package, the Commission announced a proposal for a Council Recommendation by the end of 2021 to provide further guidance to Member States on how to best address the social and labour aspects of the green transition.
Compliments of the European Commission.
The post EU Commission presents guide for a fair transition towards climate neutrality first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.